Tata Motors’ business demerger will be implemented after a NCLT scheme of arrangement, and all shareholders of TML will continue to have identical shareholding in both of the listed entities.
Tata Motors Business Demerger: Tata Motors on Monday,announced that its board has approved the proposal for the demerger of its Commercial vehicle and passenger vehicle businesses into two separate listed companies.
The commercial vehicle business and its related investments will become one entity; and the passenger vehicle businesses, including PV, EV, and JLR, and their related investments will become another entity.
Tata Motors’ business demerger will be implemented after a NCLT scheme of arrangement, and all shareholders of TML will continue to have identical shareholding in both of the listed entities.
Brokerage Firms On Tata Motors Stocks
Most of the market experts are positive on the news and also about TATA Motors stocks. However UBS has maintained its earlier sell rating on the stock and stated that the move simplifies the structure, but it does not see any material value from the move at present, reported Zee Business.
The brokerage firm’s target price stands at Rs 600. On Monday, shares of the company settled at Rs 987.20 on the BSE.
Motilal Oswal Financial Services (MOFSL) said that while the demerger seems to be a step in the right direction, “we do not foresee any need to revisit our target price, which is already based on SoTP valuation. Moreover, despite factoring in most of the positive triggers in our estimates, we get limited upside given the recent sharp run-up in the stock. We, hence, downgrade Tata Motors to Neutral (from Buy) with an unchanged TP of Rs 1,000 per share,” the brokerage adds.
Tata Motors On Demerger
“Over the past few years, the Commercial Vehicles (CV), Passenger Vehicles (PV+EV), and Jaguar Land Rover (JLR) businesses of Tata Motors have delivered a strong performance by successfully implementing distinct strategies. Since 2021, these businesses have been operating independently under their respective CEOs,” the company said in its press release.
Note added that, while there are limited synergies between commercial vehicles (CV) and passenger vehicles (PV) businesses, there are considerable synergies to be harnessed across PV, EV, and JLR, particularly in the areas of EVs, autonomous vehicles, and vehicle software, which the demerger will help secure.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice.)